Friday, October 4, 2013

Comments from the Kasner Symposium

Comments from the Kasner Symposium

This week will be a brief break from the regular blog.  All lawyers are required to have a number of hours of continuing education annually.  I recently attended the Jerry Kasner Estate Planning Symposium at Santa Clara University, my alma mater.  Several hundred attorneys, accountants, investment advisors, insurance advisors and others, spent the better part of two days, going over general notions of Estate Planning as well as updating recent events and suggesting implications and ways to work new developments.  I am going to share a few items for your education and consideration.

The first big item is a clear understanding of Estate Tax and Gift Tax exemptions.  After there being no Federal Estate Tax in 2010, the Estate Tax Exemption (ET) and the Gift Tax Exemption (GT) were again reunified in 2011.  The maximum exemption beginning in 2011 was $5,000,000 for ET and $5,000,000 for GT. These are now indexed for inflation and as of 2013 the ET is $5,250,000 and the GT is $5,250,000 and will rise a little every year, unless or until Congress seeks to change this.  This means, for planning purposes you could transfer up to $10,500,000 before taxes come into play.  Now, I know most people are saying, whoopee, this means nothing to me, I only wish I had more than $10,000,000 to give to my family.  I get it.  Me too.  However, in California it is not uncommon to have a simple house worth near $1,000,000.  It is possible to have start up stock that over night could be worth a lot.  It is possible to have a job, earning $150,000 or $200,000 per year.  Maybe your spouse has the same earnings.  And if you do, depending on other needs or choices, the accumulation of real wealth over a number of years is very possible.  Therefore, why not plan to maximize your savings, reduce the possible government take, make things just a little better.  Obviously, not everybody needs the full Estate Plan, with all the bells and whistles, kicking open every loop hole.  But, if you don’t plan for the best, then the worst could just happen.

The next item of interest was considering this exemption information relative to the type of trusts the Estate Planner puts into place for the client.  We have not yet discussed Trusts in the blog, but they are coming up soon.  But for those who have some knowledge or understanding of trusts, there have been various formats in Estate Planning, such as the standard A-B Trusts for a married couple, with a Bypass Trust, or a Survivor Trust, or a Marital Deduction Trust (also called a QTIP).  Depending on what you have, and how you have used your exemptions, or plan to use your exemptions, we may be able to simplify your trust structure, or add different trusts and allow shifting assets.

Another major topic was that of Portability.  I will likely dedicate an entire blog or more to this concept after we discuss trusts.  Portability is the ability for the surviving spouse to absorb and use any unused ET.  The key to accessing as much of the deceased spouses $5,250,000 ET is the proper allocation and application assets.  This can be used to balance values, appreciation, basis adjustment and taxes in the future.

Insurance was another facet frequently discussed.  Life Insurance to the benefit of individuals can be used to provide liquidity upon your passing, as a replacement for your income stream, paying off debts, paying off the house, paying taxes and in the business arena, even funding buy-sell agreements of family businesses or professional partnerships.  Also, Life Insurance policies can be a tool for creating tax free wealth transfers.  However, this too must be done carefully, so that amounts are properly considered, so that beneficiaries are properly identified, and that for tax purposes, ownership rights are clearly delineated.  This leads to the discussion of the ILIT – the Irrevocable Life Insurance Trust and its many permutations.

A final point to raise from the symposium was in the segment discussing current events and legal changes in the court.  The biggest impact item here were the two equal rights cases, U.S. v. Windsor, striking down part of DOMA, the Defense of Marriage Act and Hollingsworth v. Perry, the ruling against California’s Proposition 8 which banned gay marriage.  Both cases were discussed in my blog this summer.  Each case approached equal rights in a different fashion.  What has happened since then is that the IRS has issued a letter opinion, essentially a legal interpretation that the IRS will enforce, stating that any gay or lesbian couple, married in any of the 15 jurisdictions allowing for same sex marriage, will be treated as a married couple, and even if they move to state other then where they were legally married, they may file taxes as married persons, and that the state tax authorities must honor that designation for tax purposes.  Ironically, in many instances there can be some tax treatments that are not favorable to married persons, so now same sex couples can also suffer the so called “marriage penalty”.  Gotta love equality.  

Next time we will get back on track to talk about conditional devises, or gifts with strings attached.  In the weeks to come, I am planning on getting some articles contributed on tax issues and then we will start to discuss trusts.  Please stay tuned.

In the meantime, I hope you will review your Estate Plan with you're “A” Team, or at least begin to seek out an Estate Planning Attorney to start this process.  Stay tuned for future blogs.  However, if you have any questions, feel free to respond below, or if you are interested in learning more about an Estate Plan, Wills, Trusts, Advanced Healthcare Directives, or Divorce, Custody, Visitation, Child Support, Spousal Support, Property Division, Modifications, Remarriage, or Pre-Nuptial Agreements, please contact me at please contact me at, or through my other websites,, or for Fred Begun.